Why is it Necessary to File Patent in FinTech?
Patent protection is one of the most vital aspects that FinTech Companies need to work on. This is the most important in the case of FinTech Start-ups. This is because they invest a lot of time, hard work and development costs in creating unique solutions. New ideas or concepts pose a second-mover benefit when not filed or defended correctly. This is why the FinTech Industry is presently witnessing a surge in Patent filings. In this blog, we will discuss why it is necessary to file a Patent in FinTech.
What is a FinTech?
Before we discuss why it is necessary to file a Patent in FinTech, let’s first understand the meaning of FinTech. Financial Technology, usually referred to as “FinTech“, is a developing industry that provides digital technology to increase efficiencies in payments systems, banking, and financial services in different areas comprising digital marketplace financing, digital assets, investment advice, etc. The rapid innovations in blockchain & artificial intelligence bring the forefront digital experience to conducting financial business. Around 45% of customers choose digital channels over traditional financial institutions for their financial requirements, but what Intellectual Property (IP) protections are available to prevent someone from stealing your technology?
Why is it Necessary to Have Patent in FinTech Sector?
It is clearly seen that the invention benefited the FinTech Sector, which has grown over 700% in the past few years, with worldwide investments in the FinTech topping 44 Billion Dollars in the year 2020. Many FinTech startups and banks are rushing to create their Patent portfolios by getting disruptive technology in blockchain, and payment companies as financial institutions & banks rapidly understand the role of IP in their business and monetisation strategies or plans. In 2018, financial and electronic or mobile banking security technology reported for the majority of around four thousand FinTech Patent applications owned by some of the biggest organisations or companies in the area of technology & finance like Google, Visa, and IBM.
But, the rise of cryptocurrency & blockchain Patents has enabled the appearance of many FinTech start-ups and global FinTech hubs. The majority of the start-ups are leveraging business & competitive intelligence to develop Patent portfolios around FinTech trading in commodities & stocks, mining of cryptocurrencies & blockchain executed financial security rules which address the difficult financial regulatory environment.
Benefits of Filing Patent in FinTech
Following are some benefits of filing a Patent in FinTech:
- Applications for Patent are considerably valuable and can attract investment from capable investors in the market;
- Increase Market Share;
- Unlike Copyright, Patents can safeguard the functionality of the invention. A FinTech Patent prevents 3rd parties from taking advantage of the method, process or apparatus protected by the Patent. This permits the Patent owner to exercise a monopoly on their invention in terms of commercialisation/licensing. This creates a precious revenue stream that increases the company’s profile significantly.
Important Points to Remember While Filing Patent in FinTech Software
Following are some essential points to remember while filing a Patent in FinTech Software:
- Know the inventive idea in your innovation and be capable of expressing how the claimed invention gives a technical solution to a technical problem. Comprise specific elements that were specifically designed to accomplish an improved technology result or improvements to a technical area.
- Know if your software improves the way that a computer functions or employs any new functionality to get better the user experience over traditional ways or technology. Clearly explain any system, components, or sub-systems used to implement your unique method.
- Avoid the conversation of generic computer components or fundamental economic principles or methods like risk mitigation or hedging that may be construed as simply “organising human activity” or as stating “conventional actions in a proper way”.
- At last, avoid simply focusing on data aggregation & storage or simply organising information that may be performed on a conventional or general computer.
How Can You Safeguard the New Ideas?
Provided the value of FinTech Patents, the protection of your FinTech inventions should be a part of your overall Intellectual Property strategy. It is vital to consider patenting your invention at the concept stage, even before you plan to bring your invention into the market, as at times, the publication can affect the patent ability of your idea. Alterations in FinTech Law are quite active, and to file an efficient Patent, it is best to start off by first evaluating the basic steps on how to obtain a Patent.
The essential rule that applies to obtaining a FinTech Patent is to first make sure that the technical or expert idea you have brings about an appropriate change in the practical functioning of financial difficulty. FinTech Patent Proposals should meet all the industry standards like improved network security for a financial transaction, innovative interface, improved computer resources use, gained reliability in network traffic speed, etc.
FinTech Trend in India
FinTech Market possesses the ability to expand up to 32 billion dollars in India in the future. WhatsApp is well-known digital platforms for communication and a widely used messaging app with more than 200 million users in India. This app carried out UPI (Unified Payment Interface) feature that was developed by NPCI (National Payments Corporation of India). This quick transfer of money digitally between participating banks permit users a fuss-free platform for merchant payments. UPI payments are rapidly getting adopted by other worldwide giants, too, comprising Google and Google launched their payment app known as Google Tez now, it is known as Google Pay. Amazon & Samsung also launched Amazon Pay and Samsung Pay, respectively.
Apart from these huge companies, Indian digital payment companies like PhonePe, PayTM, FreeCharge, and MobiKwik are all UPI-enabled & strengthening their market game.
After discussing the importance of filing Patent in FinTech, it is concluded that there is no uncertainty that new technology advancement & disturbance in the FinTech industry will continue through 2022 as traditional banks both actively invest and obtain FinTech start-ups to give more extraordinary client service to their digitally-minded customers. Ensuring you have the correct IP protections and competitive intelligence in place will confirm you safeguard your valuable FinTech ideas while staying one step forward of the competition.
Read our article:What are the Exceptions of Patent Infringement?